The API market is taking a big shape

An Application Programming Interface (API) is a set of programming instructions and standards for accessing a Web based software application or web tool. Since we founded Mashape, “The first API Marketplace”, I thought it would be interesting to share some numbers and major players of this new API market.

API word cloud

A bit of History

API is a very old concept; but API in the cloud, accessible everywhere by anyone, the so called Open API, is a completely new story. In 2000, the first company that embraced this route was Ebay, pushing out some API to help power sellers. In 2002 came Amazon, and Salesforce in 2003. However the first strong signal was between 2005 and 2007, when Yahoo, Google, Flickr, Skype, Twitter, AOL, WindowsLive and Facebook started to push out their APIs. Since then, the trend is growing fast year over year. It took 8 years to get to 1000 APIs, but 18 months to get to 2000 APIs; 2010 has a 2x increase in new APIs per month over last year.

Potential for API

The Trend

Back in the ’90s, websites had just one distribution channel (HTML). Now, thanks to the API, they can reach thousands of users through an API being available everywhere. Now, anyone can become a ubiquitous platform. Moreover, back in ‘90s, there were only simple websites. Now, we have web, mobile and device applications running through the Internet. Thus, the power of information and data that can be used is so much more powerful than ever before. “Not having an API today is like not having a website in the 90s,” says Martin Tantow, co-founder of 3Scale.

1995: At the beginning there were just websites2005: First websites with API as add-ons; they were an additional access/interface to their existing data: e.g Yelp2008: The API has overtaken website traffic, the API is more important than the website: e.g Twitter2009: The API is the product, and websites/webapps have become web services: e.g Twilio, SimplegeoFuture: Web services become open platform, applications turn into platforms, everything is programmable and expandable

The State of the Art

Google and Facebook APIs are making more than 10 Billion queries a day, a big number even though we’re just at the beginning.

On Ebay, there is $7 Billion worth of items accessible through APIs, more than 75% of all Twitter traffic comes from their API, Amazon is making multi-million dollars out of the S3 APIs. Nowadays, Twilio and Simplegeo are going strong, while NPR is delivering 1.1 billion of stories a day via API. A few months ago, ProgrammableWeb, an API directory of the most important APIs, was acquired by Alcatel-Lucent.

Twitter, eBay, Amazon on API usage

There is a huge increase of REST API protocol over SOAP, although the latter remains strong within enterprises. Meanwhile, JSON has overtaken the XML. The most important APIs are also now supporting OAuth.

Business Models

We’re at the beginning of a new era, and usually, it takes time to monetize new things. It happened with the web search back in 1998 (Google), online music (Napster vs Pandora), video (YouTube) and social networks (Facebook). Anyhow StrikeIron, a company that sells enterprise software components as a service, is already making millions a year. I noticed 5 major revenue streams through 2 main categories:

1. API Billing

Query limit: When you exceed a prefixed quota (hourly or daily), you will be charged. E.g. If your application is making 100 QPH to the API provider, it’s free. After that, you will be charged with different prices based on the amount of queries that you’re generating.

Single transaction: You buy the API access to a service/component/data just one time

Subscription: Monthly payment to have access to a specific API, like Xignite does for financial data.

2. Infrastructure Services

Add-ons market: API is not a JSON string, API requires infrastructure and ad-hoc software to monitor, maintain versioning, and empower them. In this area, Apigee is probably the best analytics tool for your API.

Management services: When your API grows, you have to manage it as a business. Mashery excels here, providing you a mix of useful tools. 3Scale is also playing a big role in consulting as well.

The Future

As I wrote in this post about Ubiquitous computing, everything will be connected to internet. The market of Cloud Services alone will be worth $148.8 billion in 2014 according to Gartner.

Information will be available in a “liquid” format, meaning that it can assume the most useful shape for a particular situation or need. Between the 2013 and 2015, tablets such the iPad will surpass the laptop sales and by 2012, Android will be the most used operating system due to the wide adoption on multi mobile devices.

An engineering professor from UC Berkeley, Sangiovanni Vincentelli, expected in a foreseeable future (the 2017) where 7 thousand billion devices connected to the network will serve more than 7 billion people, where cars will drive us, and where we each have about 1,000 devices connected to come into relation with our lives. APIs are cross platform by nature, I can see their distribution into every corner of internet; everything will be programmable, accessible and yes, your toaster will have an API.